In promotion contests or other tournament-like situations, a principal may attach some value to the highest effort expended by an agent. We show that whenever agents interact over multiple periods, awarding a head start to one of them is optimal even with completely symmetric agents. Awarding a small head start increases maximum individual effort without decreasing aggregate effort.

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Economics Letters
Erasmus University Rotterdam

Denter, P., & Sisak, D. (2016). Head starts in dynamic tournaments?. Economics Letters, 149, 94–97. doi:10.1016/j.econlet.2016.10.008